Charlie McCreevy, head of internal market and services at the European Commission, has said he wants to overhaul European Union banking legislation to remove barriers to cross-border mergers and will detail reforms by the end of the year.

In a leading article published today he wrote that with a competitive merger, EU banking laws favoured the domestic bidder which was never the intention of the legislation.

Citing the controversial takeover battle between ABN Amro of the Netherlands and Banca Popolare di Lodi for Banca Antonveneta in Italy, he wrote that It takes longer for the domestic authorities to check the suitability of a foreign bidder's management and shareholders.

He said: "These delays could give a domestic bidder a clear advantage. This was never the intention of the EU's legislation."

He said that in the specific case of ABN Amro's bid for Banca Antonveneta, valuable time was lost because the Italian authorities undertook a review of the suitability of ABN's management and shareholders, which meant requesting information from the Dutch authorities. It already had that information for Pop Lodi.

McCreevy wrote: "It seems absurd to me that if the competent authorities of one member state accept a company that is viable in their territory, the competent authorities in other member states undertake a separate evaluation."

He proposed laying down conditions where the authorities across Europe could recognise a bank's shareholders and management.

The Commission is to present a report examining the various factors for the lack of cross-border merger activity to the EU's economic and finance ministers in September.